You’ve most likely heard the rule: Save for a 20-percent down payment before you buy a home. The logic behind saving 20 percent is solid, as it shows that you have the financial discipline and stability to save for a long-term goal. It also helps you get favorable rates from lenders.

But there can actually be financial benefits to putting down a small down payment—as low as three percent—rather than parting with so much cash up front, even if you have the money available.

THE DOWNSIDE

The downsides of a small down payment are pretty well known. You’ll have to pay Private Mortgage Insurance for years, and the lower your down payment, the more you’ll pay. You’ll also be offered a lesser loan amount than borrowers who have a 20-percent down payment, which will eliminate some homes from your search.

THE UPSIDE

The national average for home appreciation is about five percent. The appreciation is independent from your home payment, so whether you put down 20 percent or three percent, the increase in equity is the same. If you’re looking at your home as an investment, putting down a smaller amount can lead to a higher return on investment, while also leaving more of your savings free for home repairs, upgrades, or other investment opportunities.

THE HAPPY MEDIUM

Of course, your home payment options aren’t binary. Most borrowers can find some common ground between the security of a traditional 20 percent and an investment-focused, small down payment. Your trusted real estate professional can provide some answers as you explore your financing options.

We’re in the back half of the year, and with a decline in interest rates as well as home price and wage appreciation, many are wondering what the predictions are for the remainder of 2019.

Here’s what some of the experts have to say:

Ralph McLaughlin, Deputy Chief Economist for CoreLogic

“We see the cooldown flattening or even reversing course in the coming months and expect the housing market to continue coming into balance. In the meantime, buyers are likely claiming some ground from what has been seller’s territory over the past few years. If mortgage rates stay low, wages continue to grow, and inventory picks up, we can expect the U.S. housing market to further stabilize throughout the remainder of the year.”

NAR

“We expect the second half of year will be notably better than the first half in terms of home sales, mainly because of lower mortgage rates.”

Freddie Mac

“The drop in mortgage rates continues to stimulate the real estate market and the economy. Home purchase demand is up five percent from a year ago and has noticeably strengthened since the early summer months…The benefit of lower mortgage rates is not only shoring up home sales, but also providing support to homeowner balance sheets via higher monthly cash flow and steadily rising home equity.”

Bottom Line

The housing market will be strong for the rest of 2019. If you’d like to know more about your specific market, contact me to find out what’s happening in your area.

SOURCE: KeepingCurrentMatters.com

As unfortunate as it can be when homeowners fall behind on mortgage payments and must face the possibility of losing their homes, short sales and foreclosures provide them options for moving on financially. The terms are often used interchangeably, but they’re actually quite different, with varying timelines and financial impact on the homeowner. Here’s a brief overview.

A short sale comes into play when a homeowner needs to sell their home but the home is worth less than the remaining balance that they owe. The lender can allow the homeowner to sell the home for less than the amount owed, freeing the homeowner from the financial predicament.

On the buyer side, short sales typically take three to four months to complete and many of the closing and repair costs are shifted from the seller to the lender.

On the other hand, a foreclosure occurs when a homeowner can no longer make payments on their home so the bank begins the process of repossessing it. A foreclosure usually moves much faster than a short sale and is more financially damaging to the homeowner.

After foreclosure the bank can sell the home in a foreclosure auction. For buyers, foreclosures are riskier than short sales, because homes are often bought sight unseen, with no inspection or warranty.

If you plan on making home improvements this summer, you're not alone. The home renovation market has grown by more than 50% since 2009, and the overall market for home improvement and repairs in the U.S. is more than $400 billion annually, according to the Harvard Joint Center for Housing Studies.

This growth isn't surprising given the age of existing housing stock, the need for affordable homebuying options, the number of retirees opting to age in place, and the shortage of the U.S. housing supply.

To help address these challenges, Freddie Mac recently announced its CHOICERenovationSM mortgage, which offers more cost-effective options for financing or refinancing home renovations, repairs, or improvements. Further, CHOICERenovation is unique in that it allows borrowers to use proceeds to renovate or repair a property that has been damaged in a natural disaster or finance improvements to help prevent damage from a future disaster, such as building storm surge barriers, foundation retrofitting, or retaining walls.

This new offering, combined with low mortgage rates, is great news if your home needs renovations. If you're planning on using a renovation mortgage for your projects, it's important to work with a trusted lender to guide you through the process – whether you're a first-time homebuyer or a current homeowner looking to refinance.

Here are some additional tips for working with professionals to get your projects done:

• Talk to friends or check with your local homebuilders association for reliable contractors. Ask for references and check with the Better Business Bureau to see if complaints have been filed.

• Get estimates from multiple contractors.

• Make sure the contractor is licensed and registered with the state and has personal liability, worker's compensation, and property damage insurance. Ask for copies to ensure documents are current.

• Get a detailed written agreement on the work that will be completed. Before signing, be sure you understand and agree to the terms and how payments will be made.

• Don't pay in advance and never pay in cash. You may be asked to make progress payments but hold up to one-third of the contract amount until the work is completed to your satisfaction.

• Keep a written record detailing the progress of the work, payments made, approved changes, and other notes. Your records could help resolve confusion along the way.

To learn more about owning a home, call me, I am happy to answer any questions you may have!

Source: Freddiemac.com

In today’s real estate market, low inventory dominates the conversation in many areas of the country. It can often be frustrating to be a first-time homebuyer if you aren’t prepared.

In a realtor.com article entitled, “How to Find Your Dream Home—Without Losing Your Mind,” the author highlights some steps that first-time homebuyers can take to help carry their excitement of buying a home throughout the whole process.

1. Get Pre-Approved for a Mortgage Before You Start Your Search

One way to show you are serious about buying your dream home is to get pre-qualified or pre-approvedfor a mortgage before starting your search. Even if you are in a market that is not as competitive, understanding your budget will give you the confidence of knowing whether or not your dream home is within your reach.

This step will also help you narrow your search based on your budget and won’t leave you disappointed if the home you tour, and love, ends up being outside your budget!

2. Know the Difference Between Your ‘Must-Haves’ and ‘Would-Like-To-Haves’

Do you really need that farmhouse sink in the kitchen to be happy with your home choice? Would a two-car garage be a convenience or a necessity? Could the ‘man cave’ of your dreams be a future renovation project instead of a make-or-break right now?

Before you start your search, list all the features of a home you would like and then qualify them as ‘must-haves’, ‘should-haves’, or ‘absolute-wish list’ items. This will help keep you focused on what’s most important.

3. Research and Choose a Neighborhood You Want to Live In

Every neighborhood has its own charm. Before you commit to a home based solely on the house itself, the article suggests test-driving the area. Make sure that the area meets your needs for “amenities, commute, school district, etc. and then spend a weekend exploring before you commit.”

4. Pick a House Style You Love and Stick to It

Evaluate your family’s needs and settle on a style of home that would best serve those needs. Just because you’ve narrowed your search to a zip code, doesn’t mean that you need to tour every listing in that zip code.

An example from the article says, “if you have several younger kids and don’t want your bedroom on a different level, steer clear of Cape Cod–style homes, which typically feature two or more bedrooms on the upper level and the master on the main.”

5. Document Your Home Visits

Once you start touring homes, the features of each individual home will start to blur together. The article suggests keeping your camera handy to document what you love and don’t love about each property you visit.

Making notes on the listing sheet as you tour the property will also help you remember what the photos mean, or what you were feeling while touring the home.

Bottom Line

In a high-paced, competitive environment, any advantage you can give yourself will help you on your path to buying your dream home.

SOURCE: Keeping Current Matters

A “Mindful Move” can alleviate the stress of moving by focusing on giving back and positively impacting others within your old and new community.

GUSTAVO GONZALEZ

Written by NorthStar Moving Co-Founder Laura McHolm

We are all trying to be more mindful. No reason to “try;” instead, relax and be. Easier said than done, right? We all strive to be mindful: aware of emotions, present in the moment, attentive to the needs of others, conscious of our planet and calm. But, in our mindful practice, we tend to let the stressful moments of life knock us off course. And, we all know that one of the most stressful times is moving. Even during your move, you can be mindful which will actually help you relieve the stress.

The goal is to stay present, aware and to not allow the outside turmoil of all your added to-dos for your move dictate your mood. Here’s a proven trick: Flip your mindset from reacting to the moving and packing to-dos, to how your move can impact you and others. By remaining thoughtful throughout the process and using the power of kindness, you can make your move a positive experience. After all, kindness is contagious; so spread it all around on moving day and in your new hood!

Here are simple ways to conduct a Mindful Move:

Be Mindful of Your Surroundings

Moving can be a time of giving. Show your new community and your old community some love by thinking about their needs. Now, take another look at all your stuff and your clutter. Do you really want, or need, all that in your new home? Perhaps, you have clothing, furniture, kitchen items or even food you have been meaning to clear out? No time like the present to give presents to those in need.

This is not just another to-do on your moving list, it’s very simple and the rewards are immense – it’s the ultimate win-win! You assist others and at the same time you receive a clutter free home. And, a clutter free home is a more mindful space, nurturing a clearer mind and calmer life.

1. Donate Non-Perishable Food:

   • Find your local food bank here.

   • Visit www.MoveForHunger.org, a non-profit organization that will connect you with a local moving company that will deliver your non-perishable food donations to your local food bank for you. Check out their Find a Mover tool

2. Donate Clothing:

   • Salvation Army

   • Epilepsy Foundation

   • Veteran organizations

   • Big Brothers Big Sisters of America

   • Red Cross

   • Check with your local fire department, churches, synagogues and schools, to see if they are hosting clothing donation drop offs

3. Donate Toys:

   • Local children’s hospitals

   • Local Ronald McDonald House. Find a local Ronald McDonald location or care mobile here.

   • Local Boys & Girls Club

   • Many local shelters or children’s charities accept toy donations. Use this Homeless Shelter Directory to find shelters in your area.

   • Organizations like My Stuff Bags and Stuffed Animals for Emergencies offer children a familiar object in times of crisis.

   • Other places to check include a children’s social services office and even stores often have a donation bin at the front entrance where you can place donations.

4. Donate Household Goods & Furniture:

   • Habitat for Humanity ReStore

   • Salvation Army

   • Epilepsy Foundation

   • Veteran organizations

   • Big Brothers Big Sisters of America

   • Red Cross

5. Donate Vehicles

   • Habitat for Humanity Cars for Homes

   • Salvation Army

   • Kars 4 Kids

   • Wheels for Wishes

   • Cars Helping Veterans.org

Be Mindful of the Environment

Time to show Mother Earth some love. Moving is the time we finally clean out those closets, junk drawers, spare rooms, attics and garages. Moving time equals major trash time. What if you were more environmentally conscious on moving day? That would be pretty mindful, wouldn’t it?

The great green news is there are simple steps you can take during a move to reduce your waste. Being eco-conscious on moving day will boost your mood and your wallet!

1. Use Eco-Friendly Moving Supplies: From boxes, packing paper to bubble, there are now green 100% recyclable materials to keep our neighborhoods cleaner and greener. Yep, there is even biodegradable eco-bubble, pop away guilt free.
ECO-BONUS: Save money by asking your moving company for used boxes made of recyclable materials. You can get used boxes at a discount and some moving companies will even give you a refund for returning your used boxes at the end of your move. Pop! Pop! Cha-ching!

2. It’s Not Just for the Movies: Instead of the foam popcorn and peanuts, use real popcorn to pack fragile items! Just pop and fill the gaps in your boxes to secure and pad fragile items. Cheap and earth friendly!

3. Be Kind to Your Electronics: Contact a domestic e-waste recycler so your old computers, microwaves, etc. are recycled domestically, under strict environmental laws, rather than being shipped off to be processed by highly toxic and polluting techniques.

4. Don’t Just Toss it out. Upcycle and recycle everything you can. Don’t just send your old stuff to the land fill. See above on how to Donate. Donate. Donate.

5. Hire an Eco-Conscious Moving Company: Use your “green” to influence and encourage green habits by hiring companies that use environmental-friendly practices. Make sure your moving company is bright green by asking: Does the staff recycle? Are the offices and warehouse designed to be energy efficient? Do they use biodiesel to run their trucks? Do they use 100% recyclable materials? Do they sell used boxes? Do they buy them back at the end of the move? Chances are if they care about the earth, they are mindful of their customers too!

By using the power of mindfulness and kindness, you will feel more relaxed and calm during your moving experience. There is no better way to start a new chapter in life than feeling good about giving back, free of clutter and present in your new home! Time to relax and say how good it is to be om.

Learn how much you can afford on a mortgage for a new home. Coldwell Banker real estate agents will help you meet your budget and find the perfect home.

SHARON LEE

HOUSE POOR [adjective | hous – poo·r] A person who can afford his or her home mortgage payments, but can’t afford much of anything else. Discretionary spending on restaurants, furnishings, travel and clothes are severely cut back, due to a large proportion of his or her income going towards the mortgage payments, upkeep costs, and energy/utility bills.

You don’t want to find yourself stuck at home while your friends are out having fun. Buying more home than you can afford comfortably will place serious restraints on your financial life. This doesn’t sound like fun, does it?

Sure, you want a nice home. But you also want to make sure that it fits in the landscape of the rest of your life.

Here are the ABC’s of finding a dream house that you can reasonably afford.

Assess Your Ratios

Finding that magic mortgage number of how much home you can realistically afford.

Front-End Ratio: A front-end ratio is also known as the mortgage-to-income ratio. You can find this ratio by using a debt to income calculator or simply by dividing your projected monthly mortgage payments by your gross monthly income. For example, if your monthly mortgage payment would be $1,500 and your monthly income is $6,000, your front-end ratio would be 1500/6000 or 25%This projected mortgage payment should include the principal, taxes, insurance, and interest payments. Many lenders have limits on the maximum front-end ratio that they’ll permit. If you’re seeking an FHA loan, the federal cap on front-end ratios is a 31% percent limit.

Back-End Ratio: Your debt-to-income ratio is your back-end ratio. The back-end ratio can be found by adding all of your monthly debt payments, including your car payments, credit card payments and any other outstanding debt, then dividing this number by your gross monthly income, which is the amount earned before taxes or other deductions.The higher your back-end ratio is, the more difficult it is to meet your monthly mortgage payments. Lenders will also have maximum caps on this. The absolute highest back-end ratio you can have and still qualify for an FHA mortgage is 43%.

Pause and reflect on whether or not you should borrow as much as you qualify for. Consider your own ratios. Do you want to allocate your money elsewhere besides your mortgage? What percentage of your income do you feel comfortable spending on your mortgage?

Bet on Life

Are you starting a new career? Returning to graduate school? Do you plan on growing your family? If you don’t expect any big changes to your life or finances, then you may be able to afford a larger mortgage payment. If you do have life plans that will impact your finances in the near future, it may be best to secure a more manageable mortgage payment.

Also, job security is critical when deciding how much home you can afford. How long have you been working? Do you suspect any major upheavals in the company anytime soon? Have there been any major layoffs?

You never know what the future holds, make sure that you have an emergency fund that can cover all of your necessary expenses while you get back on your feet. An emergency fund should cover at least three to six months of your living expenses.

If you haven’t built this fund yet, plan out how you can put some dollars towards creating these reserves before you decide how much you want to spend on buying a house.

Calculate Other Monthly Expenses

Your total monthly expenses will affect how much home you’re able to afford.

Calculate all of your expenses, such as groceries, gas, dining out, clothes, miscellaneous goods, toiletries, cosmetics, utilities, and car expenses. Don’t forget to include line-items for travel, holidays and other annual expenses. Forgetting to calculate these annual or biannual expenses can have a reverberating impact on your ability to afford your home.

Once you’ve added these numbers, look at how much wiggle room you have left. Think about how much you want to spend on your home, while still leaving a buffer for any other costs that might creep up. After all, more savings is always a good thing.

SOURCE: ColdwellBanker.com